As growth continues to be hard to come by in the developed world, many investors have trended towards emerging markets as a way to boost sagging portfolios. While many have turned to the usual suspects of the BRIC bloc, a few wise investors have gone beyond the beaten path to smaller markets such as Malaysia, Peru, and Chile in order to provide outsized returns. These countries have seen their markets post enormous gains so far in 2010 thanks to steadily growing populations, rock solid balance sheets and increased domestic demand. Quite possibly the most incredible example of this is the nation of Colombia, which has posted enormous gains for investors.

A short time ago, investing in Colombia would have been viewed by many as a disaster waiting to happen; drug trafficking, guerrilla fighters and unstable neighbors didn't exactly make for a top-notch investing environment. However, much has changed in the past decade thanks to pro-business policies and moderating fears over continued drug related violence, which has often moved on to other countries in the region. In fact, the main ETF offering exposure to country, the Global X/InterBolsa FTSE Colombia 20 ETF (GXG), has surged by 45.2% over the past half year, and 65.3% so far in 2010. While some may be wondering if the fund may have gone a little ahead of itself, last night's earnings report by BanColombia (NYSE: CIB) could put that idea to rest for the time being [read Trouble Ahead For The Colombia ETF?].

Late after the bell, the country's largest bank reported relatively solid earnings that showed that credit demand was still continuing to rise in the country suggesting that consumers are able and willing to spend. This has translated into solid net income levels for the bank -- close to $1.06 per ADR -- which are close to 29% higher than the previous quarter and represent a 17% increase when compared to the year-ago period.

Meanwhile, the bank's loan portfolio seems to be of high quality, and loan losses look to moderate in the near future. Even if disaster should strike, the bank remains incredibly well capitalized, so it should be able to withstand any issues in the short-term. This should be good news to investors who have been scared of developed market banks; CIB's loan loss reserves represented 5.5% of total loans and 163% of past due loans at the end of 3Q10. The capital adequacy ratio also increased during the quarter and ended at 15.17%, which represents a 1.3 percentage point jump [also see The Colombia ETF's Secret Sauce].

Thanks to this earnings report, we look for GXG, which allocates roughly one-fifth of its assets to CIB, to be in focus during today's trading session. In addition to this heavy weighting in CIB, the fund offers exposure to 19 other Colombian securities by tracking the FTSE Colombia 20 Index which is a market capitalization-weighted index of the 20 most liquid stocks in the Colombian market. The index is designed to measure broad based equity market performance in Colombia and has surged in recent months thanks to stellar performance out of the fund's top components. With BanColombia's solid earnings report, look for GXG to possibly surge even higher today if the conference call later this morning satisfies investors who are looking for continued growth in this dynamic emerging market [also see Emerging Market ETF Investing: Beyond The BRIC].

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